American Ind. Ins. v Gerard Ave. Med. P.C.
Annotate this CaseDecided on December 31, 2005
Supreme Court, Bronx County
American Independent Insurance, Petitioner,
against
Gerard Avenue Medical P.C., a/a/o Angel Tejada, Respondent.
13527/2005
For Petitioner
Matthew E. Schaefer Esq.
Freiberg & Peck, LLP
12 East 41st Street, New York, NY 10017
Lucy Billings, J.
Petitioner seeks to vacate a New York No-Fault Arbitration Panel award dated February 24, 2004, granting respondent's claim for reimbursement of medical expenses arising from a motor vehicle collision. Petitioner claims the arbitrator lacked jurisdiction over petitioner. C.P.L.R. § 7511(b)(1)(iii). While the court may lack personal jurisdiction over petitioner, based on the uncontradicted attestation that petitioner has not transacted or been licensed to transact business in New York, C.P.L.R. §§ 301 and 302; LaMarca v. Pak-Mor Mfg., 95 NY2d 210, 214 (2000), petitioner still may have been subject to the arbitration forum, so that the arbitrator's award was within her power. C.P.L.R. § 7511(b)(1)(iii).
I.CONTACTS WITH NEW YORK
It is undisputed that petitioner is a Pennsylvania corporation transacting business in that state. Although not addressed in the petition or supporting affidavits, the arbitration decision concludes, and petitioner does not contradict, that it insured a vehicle involved in the collision from which the claimed medical expenses arose and which occurred in New York. A contract of insurance covering a vehicle travelling in New York does not amount to sufficient contact with the state to confer jurisdiction. C.P.L.R. § 302(a)(1); Chase Manhattan Bank v. AXA Reins., UK, 300 AD2d 16, 19 (1st Dep't 2002); New York Cent. Mut. Ins. Co. v. Johnson, 260 AD2d 638, 639 (2d Dep't 1999).
No evidence or even allegations, however, indicate that the insured vehicle was not registered in New York or that the vehicle owner was not a New York resident. These facts may bear on whether the court would have jurisdiction here. Preferred Mut. Ins. Co. v. Fu Guan Chan, 267 AD2d 181, 182 (1st Dep't 1999); New York Cent. Mut. Ins. Co. v. Johnson, 260 AD2d at 639.
II.THE REQUIREMENT THAT INSURERS SUBMIT TO ARBITRATION
More to the point for purposes of the arbitrator's power, C.P.L.R. § 7511(b)(1)(iii), the owner and operator of a motor vehicle insured for liability by a Pennsylvania insurer still may be "covered persons" under New York Insurance Law § 5102(j), if the vehicle had in effect the "financial security" required by New York Vehicle and Traffic Law (VTL) § 311. NY Ins. Law § 5102(j); Marshall v. Nationwide Mut. Ins. Co., 166 AD2d 852, 853 (3d Dep't 1990). Since even [*2]a non-resident owner of a vehicle travelling in New York must comply with New York law, making the owner liable for the vehicle's negligent operation, VTL § 388(1) and (3), a non-resident owner's failure to maintain the required financial security subjects the owner to penalties. VTL § 318(4). See Servido v. Superintendent of Ins., 53 NY2d 1041 (1981), aff'g 77 AD2d 70, 85 (1st Dep't 1980); General Acc. Ins. Co. v. Tran, 246 AD2d 543, 544 (2d Dep't 1998); Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d 358, 359 (Sup. Ct. Kings Co. 2005). "Financial security" means "ability to respond in damages for liability arising out of the ownership, maintenance or use of a motor vehicle as evidenced by an owner's policy of liability insurance." VTL § 311(3). VTL § 311(4)(a) defines an "owner's policy of liability insurance" as a liability policy with prescribed minimum limits.
If the vehicle involved here was owned by a New York resident or registered in New York, so that petitioner in fact transacted business here, requiring petitioner's policy covering the vehicle to meet VTL § 311(4)(a)'s requirements, NY Ins. Law § 5107, or petitioner's policy otherwise met them, petitioner would be an "insurer" subject to New York's claims settlement procedures. NY Ins. Law §§ 5102(g), 5106(b). Those procedures in turn require insurers to provide the option of arbitration by the New York No-Fault Arbitration Panel for claimants seeking benefits. Id.; Hospital for Joint Diseases v. Allstate Ins. Co., 5 AD3d 441, 442 (2d Dep't 2004).
If the vehicle was registered in a state other than New York, then to be an "insurer" subject to New York's arbitration procedures, NY Ins. Law §§ 5102(g), 5106(b); 11 N.Y.C.R.R. § 65.18(a)(1), petitioner, "an unauthorized insurer" in New York, but "authorized to transact business in another state," must have filed a consent to service and a declaration that petitioner's policy be considered in compliance with VTL § 311. VTL § 311(4)(c). See VTL § 344(a); 11 N.Y.C.R.R. § 65-1.8(c); Marshall v. Nationwide Mut. Ins. Co., 166 AD2d at 853; Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d at 360 & n.1. Such actions by the insurer are akin to an agreement to arbitrate or participation in the arbitration process, subjecting the insurer to the arbitration forum's jurisdiction. Nardor v. Gondol, 17 AD3d 142, 143 (1st Dep't 2005).
Medical expenses arising from a collision involving a vehicle registered outside New York and covered by an insurer authorized only in another state may be compensable based not only on the insurer's conformance with the above statutory provisions. Compensation also may be available based on an insurance policy that itself permits an interpretation extending coverage to meet other states' financial security requirements, commonly referred to as an "'Out-of-State Insurance' clause." General Acc. Ins. Co. v. Tran, 246 AD2d at 544. See American Home Assur. Co. v. Employers Mut. of Wausau, 54 NY2d 874 (1981), aff'g 77 AD2d 421, 427 n.4, 428 (1st Dep't 1980); Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d at 361 & n.2.
III.THE ARBITRATION AWARD
The arbitrator relied on New York Insurance Law § 5107. That statute requires insurers transacting or authorized to transact business in New York to sell, whether in New York or in another state, motor vehicle liability policies that meet New York's financial security requirements and to reimburse medical expenses arising out of insured vehicles' use in New York. Midwest Mut. Ins. Co. v. Pisani, 250 AD2d 512, 513 (1st Dep't 1998); Allstate Ins. Co. v. Ramos, 234 AD2d 41, 42 (1st Dep't 1996). While petitioner may not have presented the arbitrator with admissible evidence that petitioner neither transacts, nor is authorized to transact business in New York, and therefore is not subject to § 5107, petitioner does attest to those facts here, albeit without specifically addressing where the vehicle owner resides or where the vehicle is registered.
Nonetheless, even though Insurance Law § 5107 may not apply to petitioner, the provisions outlined above, in particular VTL §§ 311(4)(c) and 344(a) and 11 N.Y.C.R.R. § 65-1.8(c) or the "out-of-state insurance clause," may apply. If they do, they would require petitioner to reimburse medical expenses arising out of its insured vehicles' use in New York and subject petitioner to New York's arbitration procedures, NY Ins. Law §§ 5102(g), 5106(b); 11 N.Y.C.R.R. § 65.18(a)(1), regardless whether Insurance Law § 5107 applies. General Acc. Ins. [*3]Co. v. Tran, 246 AD2d at 544; Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d at 361 & n.2.
IV.THE RELEVANT FACTS
Although petitioner presents facts relevant to the court's jurisdiction and to Insurance Law § 5107's application, the record does not reveal, first, where petitioner's insured vehicle was registered or where the vehicle owner resided. Even if the vehicle was registered outside New York and the owner is a nonresident of this state, the record nowhere discloses petitioner's vehicle liability policy: whether it complied with New York's financial security requirements, whether petitioner filed a declaration that the policy be considered in compliance, or whether it contained an out-of-state insurance provision. VTL §§ 311(4)(c), 344(a); 11 N.Y.C.R.R. § 65-1.8(c); General Acc. Ins. Co. v. Tran, 246 AD2d at 543-44; Marshall v. Nationwide Mut. Ins. Co., 166 AD2d at 853; Property Cas. Ins. Co. of Hartford v. Clarke, 7 Misc 3d at 360-61 & ns. 1-2. These facts all bear on whether the policy may in fact provide for payment of first party benefits for a collision in New York and require petitioner to provide claimants the option of arbitration by the New York No-Fault Arbitration Panel. NY Ins. Law §§ 5103, 5106(b); 11 N.Y.C.R.R. §§ 65.18(a)(1), 65-1.8(c).
V.CONCLUSION
In sum, the issue here is not whether the court has jurisdiction over petitioner, but whether the arbitrator did, or, more precisely, whether the arbitrator had the power to award respondent benefits payable by petitioner. C.P.L.R. § 7511(b)(1)(iii). Absent the facts determinative of this issue, the court denies the petition to vacate the arbitration award. This decision constitutes the court's order and judgment dismissing the proceeding.
DATED: December 31, 2005_______________________
LUCY BILLINGS, J.S.C.
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